John McDonnell will tell Labour conference: ‘The winds of globalisation are blowing against the belief in the free market.’
Photograph: Peter Nicholls/Reuters

The shadow chancellor, John McDonnell, has begun setting out Labour’s vision for what he described as an interventionist but innovative government approach to help the British economy grow in the digital age.

Ahead of his main speech to the party’s annual conference in Liverpool, due just after midday on Monday, McDonnell said his plan involved committing large sums of government investment to help transform the economy.

The aim was to create “an entrepreneurial state”, he told BBC Radio 4’s Today programme.

McDonnell said: “It’s a modern term but it sets out, I think, what other states are doing. The state has a role in the economy, working with entrepreneurs and wealth creators, developing and investing in the long term, in patient, long-term investment in research and development and science, helping people develop the products and the markets in that way to create a prosperous society.”

In an earlier interview on Sky News, McDonnell said this would involve a national investment bank borrowing £100bn, which would in turn “lever in” £150bn more in private funding to help invest in infrastructure and skills.

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He compared the idea to the Bank of England’s injection of £70bn into the economy through quantitative easing.

“Short-term interventions like that do pay dividends pretty quickly,” he said. “We think we can get growth growing very quickly in this economy and it will then pay for itself. So in the short term, yes there will be some increased costs, but borrowing at the moment is extremely low-cost.”

McDonnell’s speech is to argue that the rules of globalisation are shifting, and that other governments were moving towards direct intervention.

He is expected to say: “We need a new deal across our whole economy. Because whatever we do in Britain, the old rules of the global economy are being rewritten for us. The winds of globalisation are blowing in a different direction. They are blowing against the belief in the free market, and in favour of intervention.

“Be certain, the next Labour government will be an interventionist government. We will not stand by like this one has and see our key industries flounder and our future prosperity put at risk. When we return to government we will implement a comprehensive industrial strategy.”

McDonnell will say that in the wake the vote for Brexit, the aim will be to create “an entrepreneurial state that works with the wealth creators, the workers and the entrepreneurs to create the products and the markets that will secure our long-term prosperity”.

Labour will also commit itself to a multibillion pound pledge to make up any shortfalls in funding for deprived regions and communities resulting from Britain’s departure from the European Union.

That promise – to be announced by the shadow foreign secretary, Emily Thornberry, guarantees that future Labour governments will match EU structural funding currently worth €10.8bn (£9.3bn) from 2014 to 2020.

The chancellor, Philip Hammond, announced in August that the Treasury would guarantee to back EU structural and investment funding projects signed before this year’s autumn statement, in a move which could cost up to £6bn a year up to 2020.

However, Thornberry will say: “For the period after, they have said nothing. That is not good enough. Without long-term certainty over funding, our most deprived regions and communities cannot plan ahead. They cannot attract other investment. They cannot make progress.

“So thanks to John McDonnell, Labour’s shadow chancellor, we can guarantee that a future Labour government will make up any shortfall in structural funding into the 2020s and beyond. And the same will go for the funding of peace and reconciliation projects in Northern Ireland. The communities who stand to lose out most from Brexit must be looked after first.”

Regions likely to benefit most from the scheme would be Wales, which is allocated €2.4bn under the current seven-year programme, south-west England, which is due to receive €1.5bn and the north-west, with an allocation of €1.13bn.